Subrogation is a term that's well-known in legal and insurance circles but often not by the people who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to comprehend the nuances of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.

An insurance policy you have is an assurance that, if something bad occurs, the business that covers the policy will make restitutions in a timely manner. If a storm damages your house, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a method to recover the costs if, ultimately, they weren't actually responsible for the payout.

Can You Give an Example?

You are in a traffic-light accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was at fault and her insurance policy should have paid for the repair of your auto. How does your insurance company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.

How Does This Affect the Insured?

For one thing, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by raising your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as estate planning attorney paddock lake wi, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurers are not created equal. When shopping around, it's worth contrasting the records of competing agencies to evaluate if they pursue valid subrogation claims; if they do so fast; if they keep their policyholders apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.

estate planning attorney paddock lake wi